OCWEN LOAN SERVICING, LLC v MARINO
- Case Type:
- Case Status:
- Affirmed in part and Reversed in part
- NV-16-1229-FLTi and NV-16-1238-FLTi (9th Circuit, Dec 22,2017) Published
- (1) Affirming the bankruptcy court's judgment of $1,000 per each improper post-discharge contact of the debtors by the creditor; and (2) vacating, and remanding to the bankruptcy court, the bankruptcy court's conclusion that it did not have authority to award punitive damages against the creditor.
- Procedural context:
- The debtors (the Marinos) and the creditor (Ocwen) cross-appealed after the bankruptcy court ruled that (1) Ocwen had violated the discharge injunction, (2) the Marinos were entitled to $1,000 of damages for each violation of the discharge injunction, and (3) the bankruptcy court did not authority to enter punitive damages against Ocwen. Ocwen also appealed the bankruptcy court's consideration of telephone calls made by Ocwen to the Marinos, arguing that the telephone calls were not specifically referenced in the motion for contempt and that Ocwen's records show that only 35 calls occurred.
- The Marinos filed a chapter 7 petition in 2013, and noted that they intended to surrender certain real property. The Marinos received a discharge three months later. The bankruptcy court subsequently granted the holder of the second mortgage on the property relief from stay, and closed the case in September 2013.
Following the discharge, Ocwen began sending the Marinos correspondence regarding the first mortgage loan, and continued to do so through April 2015. Certain correspondence included a "for information purposes only" disclaimer, apparently in an effort to avoid the automatic stay and discharge injunction. Ocwen also called the Marinos, asking for payment.
In November 2015, the Marinos requested the bankruptcy court to reopen their case to deal with Ocwen's violations of the discharge injunction.
Ocwen objected. Ocwen argued that the disclaimer language on 22 letters to the Marino as evidence of pure intent. Ocwen also argued that the remaining correspondence was required by federal or state law, and was "not [for] collection of a debt."
The bankruptcy court held an evidentiary hearing dealing with Ocwen's intent and damages. At the evidentiary hearing, Mr. Marino testified that Ocwen's post-discharge communications made him feel "humiliated, tormented, and harassed." Mrs. Marino testified that Ocwen's post-discharge communications gave her severe stomach pains. Both of the Marinos testified that the stress caused them to contemplate divorce. A family friend also testified, and affirmed the Marinos' testimony about the effect of the continued communications from Ocwen.
The bankruptcy court considered Ocwen's defense that its communications regarding force-placed insurance and the like was required by law. The bankruptcy court rejected these arguments, specifically finding that Ocwen "included additional language ... indicat[ing] that [Ocwen was] trying to collect money from the debtor[s]."
Likewise, the bankruptcy court found that Ocwen's disclaimer language was ineffective.
The bankruptcy court awarded the Marinos damages for emotional distress, actual damages, and attorney's fees and costs. The bankruptcy court further stated that 9th Circuit precedent established that the bankruptcy court did not have authority to award punitive damages.
- FARIS, LAFFERTY, TIGHE (U.S. Bankr. C.D. Cal., sitting by designation)
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